Stock option compensation: impact of expense recognition on performance indicators of non-domestic companies listed in the U.S.

Street, Donna L.; Cereola, Sandra J.

doi:10.1016/j.intaccaudtax.2004.02.004

Cited by 24 publications

(12 citation statements)

References 11 publications

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“…However, since the implementation of IFRS 2, both equity-settled and cash-settled SBP transactions affect profit or loss and therefore earnings used in the calculation of EPS. Pre-IFRS 2 implementation studies conducted in the US and Australia (Street and Cereola, 2004;Chalmers and Godfrey, 2005) Melis and Carta (2010) and Shiwakoti and Rutherford (2010).…”

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

“…Previous research in the US suggested a material negative impact on key performance measures for large companies domiciled outside the US but with varying significance per country (Street and Cereola, 2004). Given the magnitude of the anticipated impact of expense recognition for non-US entities evident in the Street and Cereola (2004) (2004), Street and Cereola (2004) and Chalmers and Godfrey (2005)) on the SBP effect on EPS and other performance ratios focused on the period prior to the adoption of IFRS 2.…”

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

“…Given the magnitude of the anticipated impact of expense recognition for non-US entities evident in the Street and Cereola (2004) (2004), Street and Cereola (2004) and Chalmers and Godfrey (2005)) on the SBP effect on EPS and other performance ratios focused on the period prior to the adoption of IFRS 2.…”

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

“…Street and Cereola (2004) subsequently also used SFAS 123(R) to determine the average impact on non-US domiciled firms listed on US exchanges and found that the impact of expensing stock-based compensation schemes on DEPS would also be material and estimated the impact up to 40% on this measure. They also determined that the effect of expensing stock-based compensation transactions varied significantly by country.…”

Section: Pre-implementation Studies In the Us And Australiamentioning

confidence: 99%

“…They also determined that the effect of expensing stock-based compensation transactions varied significantly by country. Street and Cereola (2004) concluded that the effect of expensing stock options in accordance with the IFRS 2 requirements would have a median (mean) impact of 6.29% (41,19%) on DEPS if the requirements of IFRS 2 were to be applied. Chalmers and Godfrey (2005) found that the median impact of expensing share options on the Australian sample companies would be 3.18% on DEPS.…”

Section: Pre-implementation Studies In the Us And Australiamentioning

confidence: 99%

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The effect of expensing share-based payments on basic earnings per share of South African listed companies

Pretorius

Villiers

2013

Meditari Accountancy Research

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Purpose -This study aims to investigate the post-implementation impact of expensing sharebased payment transactions on basic earnings per share. In recent years, IFRS 2 was one of the most opposed and controversial standards issued by the IASB.Design/methodology/approach -The sample relates to the period immediately after implementation (2006)(2007)(2008)(2009) and consists of the 531 firm-year observations where sharebased payments were present among Johannesburg Stock Exchange listed companies. The effect of share-based payments on basic earnings per share is assessed.Findings -The findings of this study show a statistically significant impact on basic earnings per share, but the results are more modest than suggested by prior studies. The number of companies reporting a share-based payment expense increased over the five-year period [2005][2006][2007][2008][2009].Originality/value -The introduction of IFRS 2 caused small but not necessarily immaterial changes to the income profile of companies. This is important for analysts and general users of financial information who need to be aware of these changes. The results also suggest that IFRS 2 did not merely cause accounting policy changes, but has impacted on the way sharebased payment transactions are used by companies.KEY WORDS: basic earnings per share; earnings per share; IFRS 2; listed companies; share-based payment expense; share-based payment transaction; South Africa 1

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Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

Section: Accounting Standards Board (Fasb) In the United States Of Ammentioning

confidence: 99%

Section: Pre-implementation Studies In the Us And Australiamentioning

confidence: 99%

Section: Pre-implementation Studies In the Us And Australiamentioning

confidence: 99%

See 3 more Smart Citations

The effect of expensing share-based payments on basic earnings per share of South African listed companies

Pretorius

Villiers

2013

Meditari Accountancy Research

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Does accounting regulation enhance corporate governance? Evidence from the disclosure of share-based remuneration

Melis

Carta

2009

J Manag Gov

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Accounting for stock options and share-based remuneration is a controversial issue. The purpose of this study is to explore the impact of the mandatory adoption of IFRS 2 on accounting for share-based remuneration by Italian listed\ud companies. The requirements under this standard could have relevant implications\ud for corporate governance as IFRS 2 is expected to reduce the information asymmetry\ud that may exist between corporate insiders and outsiders regarding such\ud remuneration. Empirical evidence confirms that overall disclosure in annual reports\ud concerning the costs of remuneration plans has increased following the adoption of\ud IFRS 2, although some cases of lack of disclosure have also been found. We find\ud that this change in accounting regulation has contributed towards revealing the‘true’ cost of share-based remuneration to minority shareholders and other investors, together with some evidence of creative accounting surrounding the substance over form principle

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Expensing performance-vested executive stock options: is there underreporting under IFRS 2?

Merz

2019

J Bus Econ

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Stock option compensation: impact of expense recognition on performance indicators of non-domestic companies listed in the U.S.

Cited by 24 publications

References 11 publications

The effect of expensing share-based payments on basic earnings per share of South African listed companies

The effect of expensing share-based payments on basic earnings per share of South African listed companies

Does accounting regulation enhance corporate governance? Evidence from the disclosure of share-based remuneration

Expensing performance-vested executive stock options: is there underreporting under IFRS 2?

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